Yahoo Finance USD/CAD Exchange Rate Prediction – The Loonie Rises Following CPI Report
The USD/CAD declined on Wednesday, despite broader dollar gains following a solid Canadian CPI report and the Fed’s decision to keep rates unchanged. While the Fed’s decision was widely expected, U.S. Treasury yields moved higher. Canadian CPI decelerated following a torid pace in May but still remains elevated and above the Bank of Canada’s target rate.
Technical Analysis
The USD/CAD moved lower, failing near resistance at the 10-day moving average at 1.2598. Support is seen near the 100-day moving average seen near 1.2367. Short-term momentum has flip-flopped and turned positive as the fast stochastic generated a crossover buy signal. Medium-term momentum is negative as the MACD (moving average convergence divergence) histogram prints in negative territory with a declining trajectory which points to a lower exchange rate.
Canada’s Inflation Rises
Canada’s inflation rate slowed in June, rising 3.1% on a year-over-year basis. While inflation remains hot, the figure is down from 3.6% in May, which was the largest increase in a decade. Statistics Canada reported that prices slowed due to the spread of the pandemic. Gasoline prices, saw a year-over-year rise of 32% in June compared with 43.4% in May. Excluding gasoline prices, the annual rate of inflation would have been 2.2%. CPI rose 0.3% month over month compared to a 0.5% increase in May.
This article was originally posted on FX Empire
